D.C. AG Schwalb Settles with Fintech Platform over Usurious “Tipping” Model

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  • District of Columbia AG Brian Schwalb settled with SoLo Funds, Inc. to resolve allegations that the fintech platform violated the District’s Consumer Protection Procedures Act and usury statute by deceptively charging consumers exorbitant interest rates disguised as “tips” and “donations.”
  • According to AG Schwalb, SoLo allegedly marketed its platform as a way to obtain consumer-to-consumer loans with no interest and no fees but, in reality, SoLo required nearly all borrowers to pay a percentage of the loan as a “tip” to the lender as well as another percentage as a “donation” to the company, resulting in APRs on loans exceeding 500% per loan, far above the District’s 24% usury cap.
  • Under the terms of the settlement, SoLo must pay $30,000 to the District, which will go towards restitution. The company must also block consumer lenders on its platform from being able to see whether a consumer borrower is offering a tip prior to the lender funding the loan, and the company must ensure that tips and donations do not impact a consumer’s loan approval, among other injunctive terms.
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